How to Measure Performance in a Purposeful Company? Analysing the Status Quo.

Abstract

This paper examines the relevance of the British Academy Principles for Purposeful Business in the area of corporate measurement and performance. Because measurement and performance are critical for effective and sustainable management, the success of putting purpose into practice hinges on the ability to create metrics beyond solely financial standards and benchmarks. Drawing on expert interviews, case studies and document analysis, this paper analyses the current ecosystem of "nonfinancial" measures, discussing which frameworks and methodologies organisations can choose from and how these may differ in utility. It further explores whether and how metrics can be practically integrated with the traditional financial performance measurement, such as profits and capital investments. This enquiry provides an analysis of the remaining gap between existing non-financial measurement and accounting efforts and their full integration into organizations. The paper concludes with a discussion of three areas in which non-financial measurement is believed to be most impactful: investment practice, management decision making & incentivization, and corporate governance.

Opportunities and Challenges of Purpose-Led Companies: An Empirical Study Through Expert Interviews

“…Relationship between purpose and financial performance Porter Novelli (2019) Online survey, 1193 Americans Purpose improves consumer loyalty and companies reputation Stroehle et al (2019) Nine interviews; four case studies with companies Relevance of the British Academy Principles for Purposeful Businesses (see The British Academy 2018) ANA (2020) Online survey with 259 B2B professionals Stated purpose vs. activated purpose gap; Communicating purpose; purpose empowers Stakeholders Collins and Saliba (2020) Four interviews with representatives of small and medium size enterprises; Survey with 110 participants Purpose improves the relationship between stakeholders and the company; purpose before profit improves customer loyalty Lleo et al (2020) Survey with 862 employees from eight Spanish companies Purpose implementation; measuring the intensity of purpose here (The Energy Project and HBR 2014, p. 7). The concerns expressed in the literature that some employees may be hesitant to pursue a corporate purpose, are also barely analyzed in the empirical studies.…”